Why Brandeis Matters

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BOOKS AND ARTS JUNE 29, 2010

Why Brandeis Matters

Louis D. Brandeis: A Life

By Melvin I. Urofsky

(Pantheon, 955 pp., $40)

I.

In 1916, Herbert Croly, the founder and editor of The New Republic, wrote to Willard Straight, the owner of the magazine, about the Supreme Court nomination of Louis Brandeis. Croly enclosed a draft editorial called “The Motive of Class Consciousness,” and also a chart prepared by a lawyer in Brandeis’s office showing the overlapping financial interests, social and business connections, and directorships of fifty-two prominent Bostonians who had signed a petition opposing Brandeis’s nomination. There are five circles on the chart delineating the various hubs of the Brahmin oligarchy: the Somerset Club, banker, State Street, Back Bay resident, and large corporation connections. On one side, the chart connects each of the signers of the petition, led by Harvard President Abbot Lawrence Lowell, to each of the five hubs; on the other side, the signers are connected to each other. “I want you to understand right away that this chart and article will not be published without your consent,” Croly assured Straight.

Neither the chart nor the article ultimately appeared in TNR. Straight had worked for Brandeis’s nemesis J. P. Morgan as the Morgan Bank’s representative in China, and he refused to associate the magazine with “ideological recriminations against his friends and social acquaintances,” according to an explanation accompanying the chart, which is now displayed in the current editor’s office. But although Straight confirmed the power of what Brandeis called “our financial oligarchy” by killing the chart, the magazine continued to strongly supported his nomination. During the confirmation fight, Croly, Walter Lippmann, and Felix Frankfurter wrote vigorous responses to the attacks on Brandeis, and Brandeis later joked to Learned Hand that TNR should bear at least some responsibility for his confirmation.

During the past hundred years, the magazine has continued to champion the principles that made Brandeis the greatest constitutional philosopher of the twentieth century: opposition to the curse of bigness, in corporations and government; devotion to judicial restraint in cases involving economic regulations; judicial vigilance in cases involving free speech and civil liberties; and an enthusiasm for Zionism. But this is an especially appropriate time to evaluate Brandeis’s legacy. The nomination of Elena Kagan to Brandeis’s seat on the Supreme Court comes at a time when progressives are rediscovering the virtues of judicial restraint, as conservatives rush to court to challenge their political defeats in areas ranging from corporate campaign spending to health care reform and economic oversight. And a masterful new biography by Melvin Urofsky offers all the biographical details necessary for reassessing Brandeis’s uncanny relevance.

Urofsky’s book is the culmination of a career of invaluable scholarship on Brandeis. It is comprehensive, fair-minded, balanced, and altogether illuminating about the man who, in Urofsky’s words, remained—throughout his four careers as a lawyer, reformer, Zionist, and jurist—“the idealistic pragmatist, one whose faith in time remained great.” This is a definitive biography of Brandeis for our time. While Urofsky does not examine Brandeis’s contemporary relevance, he provides the biographical details necessary for asking and answering an increasingly urgent question: what does Brandeis mean today?

As it happens, he means a great deal. Brandeis, who predicted the crash of 1929 and would have predicted the crash of 2008, was the most far-seeing prophet of economic regulation in an age of financial crisis and the most ferocious critic of “the curse of bigness” in an age that anticipated “too big to fail.” More than any other Supreme Court justice of the twentieth century, he can instruct us in the need to translate constitutional values in an age of technological change. And as the leader of the American Zionist movement, he was the most prominent advocate of a vision of cultural pluralism that remains more salient than ever in an age of globalization and technological homogenization.

 

II.

After Jefferson, Brandeis was the most important American critic of bigness, in business and government; and his views about the need for citizens to achieve their potential in small-scale communities reflected his own upbringing and background. He was born in Louisville, Kentucky in 1856, the son of a wholesale grain merchant who had fled Prague after the revolutions of 1848. His parents prized books and music, and were not observant Jews—the Brandeis children exchanged Christmas cards and were chastised by members of the Jewish community in Louisville for riding on Yom Kippur. From his father, Brandeis absorbed the idyllic vision of a small businessman who, through hard work on a human scale, could provide for the needs of his employees, his family, and his community. He also learned about the dangers of the big banks who gambled with “other people’s money”: his father was wiped out in the Panic of 1873, after the collapse of Eastern banks left several of his clients bankrupt.

Brandeis’s father then took the family to Europe for three years, to show his children their roots. After studying at the Annen-Realschule in Dresden, where he learned the importance of mastering facts, Brandeis returned to America and shone at Harvard Law School, earning the highest grades in the history of the school. His closest friend on the faculty was James Bradley Thayer, the acolyte of strenuous judicial deference, and he was also stirred by Emerson and Thoreau. After law school he set up a law practice in Boston with his classmate Samuel Warren, a Boston aristocrat, with whom he wrote, in 1890, “The Right to Privacy,” published in the Harvard Law Review, one of the most famous law review articles in American legal history. It was inspired, according to Brandeis, by Warren’s “deep-seated abhorrence of the invasions of social privacy” by the instant camera and the tabloid press.

In thirty-seven years of law practice, Brandeis became one of the most successful lawyers in America, hailed as “the people’s lawyer” for representing the interests of family businesses and minority stockholders in fights against the rapacious monopolies of the Gilded Age. But although Brandeis came to be a leader of the Progressive movement, he saw himself as fighting for what Urofsky calls the traditional view of the relationship between the commonwealth and private businesses, in which the state defended the public interest, financial probity, and the accurate valuation of corporate property. By the turn of the century, however, this view was under siege by the modern view, championed by Wall Street bankers, which saw stock as an uncertain commodity that investors bought at their own risk. According to this view, widespread in the Gilded Age, the state had no role in regulating corporations beyond preventing outright fraud.

Brandeis cast himself as “counsel to the situation,” a kind of Jeffersonian McKinsey consultant, representing the interests of both labor and management, and his crowning achievement as a reformer was savings bank insurance in Massachusetts, which identified an evil—the exploitation of poor workers by rapacious insurance companies—and a pragmatic, small-scale, legislative solution (selling insurance at fair prices through savings banks) that avoided heavy-handed government regulation. Brandeis considered the result “a perfect reform.” He would have been suspicious of the centralizing tendencies of the Obama health care bill.

Brandeis’s legacy as an economic prophet rests on Other People’s Money and How the Bankers Use It, the remarkable book that he published in 1914, based on a series of prescient articles he had written the previous year for Harper’s. Those articles were written to promote the findings of the Pujo Committee, a House banking subcommittee in 1912 headed by Arsène Pujo of Louisiana. Convened to investigate the excesses of the “money trust,” the Pujo Committee concluded that a small group of Wall Street bankers had abused the public’s trust by consolidating their control over banks and industries, choking off credit and competition in the process. Brandeis set out to enumerate the ways that “our financial oligarchy” threatened not only the American economy but also American democracy.

“The American people have as little need of oligarchy in business as in politics,” Brandeis declared. In 1890, there was no national constituency about the dangers of corporate bigness; but twenty years later the Progressive movement had been so successful that presidential candidates in both parties crusaded against the money trusts, although they disagreed about the appropriate responses. In the presidential campaign of 1912, the Hamiltonian Theodore Roosevelt (with the help of Herbert Croly) argued for regulated monopoly, accepting the efficiencies of large industrial corporations, but countering them with strong government regulations. But for the Jeffersonian Brandeis, who advised Woodrow Wilson during the campaign, the problem was not industrial monopoly but financial oligarchy. He opposed big government as well as big business, and therefore he opposed also the central regulation of the money trusts. Instead he was determined to break up the trusts and to untangle the web of political and economic influence that made concentrated financial power possible in the first place.

The villain of Other People’s Money was not Roosevelt’s nemesis, the industrial monopolist John D. Rockefeller. It was Brandeis’s nemesis, the financial oligarch J. P. Morgan. “And to think, he wasn’t even a rich man,”Rockefeller reportedly said when Morgan died in 1913 and his estate was reported to be worth $80 million, compared to Rockefeller’s worth of almost a billion. Rockefeller missed the point that Brandeis grasped. Morgan’s power came not from his own money, but from the billions of dollars of what Brandeis unforgettably called “other people’s money” that he controlled. By 1911, according to some estimates, Morgan controlled 40 percent of the capital raised in America.

How did Morgan and his fellow oligarchs leverage themselves into this kind of power? Brandeis accused investment bankers of using other people’s money to take control of large companies which they then used to promote their own interests rather than the public interest. Other People’s Money begins by warning about the dangers of merging the functions of the commercial banker and the investment banker. The original—and proper—function of the investment banker, Brandeis says, was that of a dealer in stocks and bonds. People needed to invest their savings; investment bankers would advise them about which securities were the soundest investments. But then investment bankers such as J.P. Morgan began to form and to control massive trusts—such as the railroad trusts—that manufactured and promoted stocks and bonds and then sold them back to J. P. Morgan & Co. itself with money borrowed from the many commercial banks that Morgan also controlled. “Can there be real bargaining,” Brandeis asked, “where the same man is on both sides of a trade?” The key to the investment bankers’ power, Brandeis wrote, was not ability or wealth but oligarchical consolidation, which allowed them to become the directors of huge combinations of railroads, insurance companies, banks, and trust companies, all of whom relied on them for funds. “The makers of our Constitution had in mind like dangers to our political liberty when they provided so carefully for the separation of powers,” Brandeis wrote, astutely warning of the risks of oligarchy in the political and corporate sphere.

Rather than putting his own capital at risk, Brandeis wrote, “it is the investment banker’s access to other people’s money in controlled banks and trust companies” that allowed bankers such as Morgan to dominate and control credit for the entire country. The investment bankers “tak[e] the golden eggs laid by somebody else’s goose” and bind the people in fetters “forged from the people’s own gold.” (Brandeis’s gift for the memorable aphorism is one of the many sources of his rhetorical power.) The assets of Morgan and his associates swelled exponentially because they had achieved “the supposedly impossible feat of having their cake and eating it too,” buying the bonds and stocks of railroads they controlled and, instead of parting with the purchase price, retaining it in their own coffers as bankers to the controlled corporations. They further accumulated wealth and power by paying themselves huge and unreasonable underwriting commissions for their self-dealing services. (These anticipated the scandal over bonuses during the current crash.) And “the invasion of the investment banker into the banks’ field of operation was followed by a counter invasion by the banks into the realm of the investment banker,” as commercial banks realized that they could make much more through risky investments with other people’s money than by their traditional function of making temporary loans to small businesses.

 

Brandeis’s attack on the House of Morgan has been criticized for its economic naïveté. Urofsky notes that Brandeis, with his romantic vision of Massachusetts railroads financed by Massachusetts banks and controlled by Massachusetts directors, “seemed oblivious to the economic realities that led many people to support consolidation” of the railroads at a time when it no longer made sense to have multiple lines with parallel tracks in local markets. The business historian Thomas McGraw has argued more generally that Brandeis’s ideological opposition to bigness in all of its forms led him to ignore the distinction between large “center firms,” such as Standard Oil, and smaller peripheral firms such as the family merchants, the Hechts and the Filenes, that he represented as a lawyer in Boston. Brandeis was concerned about loose horizontal combinations of both peripheral and center firms, in which producers of the same item could agree to limit production or keep prices high, harming efficiency and consumers in the process. But he failed to recognize the way vertical integration—the collection of different business functions under a single large roof—could bring economies of scale for the most successful center firms, bringing down prices and ultimately helping consumers.

Brandeis’s critics are surely right that his romantic attachment to maximizing the numbers of small wholesalers and retailers led him, first as an advocate and then as a Supreme Court justice, to support policies, such as fixing retail prices at uniform levels, that ultimately harmed consumers. (The least modern—though perhaps most prescient—aspect of Brandeis’s thought was his contempt for the consumer, whom he viewed as “servile, self-indulgent, indolent, ignorant,” and easily manipulated by advertising—the very opposite of the engaged citizen.) But these criticisms miss the fact that for Brandeis, the real “curse of bigness” was ultimately not economic inefficiency but greed, recklessness, and oligarchy.

Brandeis shows how the growth of America’s most productive industries—from railroads to steamships to telegraphs, cars, and electricity—was originally financed by risk-taking investors (we would call them venture capitalists) rather than investment bankers. (This pattern would be repeated during the high-tech revolution.) And once the investment bankers took control of industries, Brandeis argued, they threatened to run them into the ground through “financial recklessness,” endangering the smaller investors whose assets they were supposed to protect.

The recklessness of investment banker-managers took the form of fraudulent accounting practices and a huge increase in short-term borrowing to buy stock in other companies, all in an effort to boost stock prices. This indebtedness, Brandeis charged, represented an “extraordinary lack of financial prudence”: when money became tight and the loans had to be repaid, the companies were forced to sell at depressed prices that left no money for dividends. In Brandeis’s view, the failure of banker management was not accidental but structural: “It was the natural result of confusing the functions of banker and businessman.”

Brandeis proposed a series of remedies for these evils. He believed that disclosure of the excessive underwriting fees, commissions, and profits of the investment banks would lead to public protests against them. “Publicity is justly commended as a remedy for social and industrial diseases,” he famously wrote. “Sunlight is said to be the best of disinfectants; electric light the most efficient policeman.” He supported two of the reforms that gained public support after the findings of the Pujo Committee: the Clayton Antitrust Act of 1914 and the Sixteenth Amendment, ratified in 1913, which allows Congress to levy an unapportioned tax on income from property, such as interest, dividend, and rent income.

As an adviser to Woodrow Wilson, Brandeis helped to broker the compromise that led to the adoption of the Federal Reserve Act of 1913. The banking industry was stung by the panic of 1907, in which J. P. Morgan had single-handedly mobilized the capital that bailed out the American financial system. Led by Senator Nelson Aldrich, the son-in-law of John D. Rockefeller Sr., the bankers supported the creation of a strong central bank, controlled by the bankers themselves, that would bail out the financial system with taxpayer money in the event of future crashes while minimizing government regulation and oversight that might prevent the banks from gambling with other people’s money in the first place. But this alternative became politically infeasible after the Pujo Committee and Brandeis seemed to suggest that a secret cabal of big banks was running the country for its own benefit. Instead, the compromise brokered by Brandeis and others created the Federal Reserve as a decentralized coalition of not more than twenty private banks that could bail out the banking system by issuing short-term loans and lowering interest rates. The federal government would control the central bank through a Federal Reserve Board appointed by the president; but the Federal Reserve banks would remain technically private and would have the power to appoint two-thirds of their directors.

The decentralized Fed was a distinctively Brandeisian solution to the challenge of financial regulation: he feared the curse of bigness in government as well as business, and opposed a government-owned banking system supported by Democratic populists such as William Jennings Bryan as well as the Wall Street proposal that would have allowed private banks to issue currency. The Federal Reserve Act of 1913, one of the most important pieces of legislation in American history, “struck a balance between private power and control on the one hand and public supervision on the other,” Urofsky writes, “a balance that both Brandeis and Wilson cared greatly about.”

Yet light federal regulation in the 1920s, combined with the cheap money made possible by the Fed’s refusal to raise interest rates, created a speculative frenzy that culminated in the crash of ’29. As Norman Hapgood wrote in the preface to the 1933 edition of Brandeis’s book, “the fatalities following 1929 came to a large extent from the failure to act on the principles sharply drawn in Other People’s Money.” The creation of the Fed unleashed billions of dollars in credit, and devices such as the “broker’s loan” allowed banks to engage in increasingly risky practices, such as lending investors funds to buy inflated stocks on margin—a dangerous practice because when stocks go down rather than up, borrowers have to repay, quickly wiping out the leveraged investors who had to sell everything at fire-sale prices. Brandeis, who considered the stock market a form of legalized gambling and invested his own money in conservative bonds, disapproved of new methods and instruments that allowed consumers to buy on credit, which he also viewed as dangerous speculation. “I wish to record my utter inability to understand why a lot of folks don’t go broke,” he observed in 1926, predicting “a breakdown within a year.”

The regulatory response to the crash and the Great Depression that Brandeis predicted occurred in two phases. The first New Deal generally reflected Brandeis’s ideas about the curse of bigness more than the second. Its capstone was the Banking Act of 1933, known as the Glass-Steagall Act, which separated commercial banks and investment banks by prohibiting commercial banks from selling stocks. In exchange for strict regulation, commercial banks would be protected from failure with federally insured deposits. (The regulation of investment banks, overseen by the Securities and Exchange Commission, focused on the Brandeisian goals of disclosure and preventing fraud—the goal was to protect investors rather than the bankers themselves.) The separation of commercial banking from investment banking forced Morgan to divest its investment-banking operations into Morgan Stanley. The House of Morgan, according to Urofsky, blamed its troubles on Brandeis and was convinced that the 1933 reissue of Other People’s Money had been responsible for Glass-Steagall.

For Brandeis, the separation of commercial banking and investment banking was not an adequate response to the curse of bigness. He also wanted to ban interlocking directorates and eliminate most holding companies, and he felt that the Roosevelt administration’s response to corporate size—antitrust prosecutions under the Sherman Act—was tepid and inadequate. But his most radical response to the Great Depression, outlined in letters to Felix Frankfurter in 1933, was a massive public-works program to put people to work on projects ranging from irrigation and slum clearance to adult education. The program was to be financed initially by loans and then “by high estate & income taxes with share to the States.” More broadly, Brandeis wrote to Frederick Howe that he would limit corporate size by levying “an annual excise tax rapidly progressing in the rate as the total capitalization of the Corporation rises.” He also proposed sharp increases on income taxes for corporations and rich individuals; a steep federal inheritance tax; unemployment insurance; and breaking up the banking system into commercial, savings, and investment units.

The financial reforms of the 1930s that Brandeis inspired—particularly the Glass-Steagall Act—helped to insure financial stability for the next half-century, which was marked by the lowest bank-failure rate in America’s history. But in the 1990s those regulations were dismantled, owing to the cozy relationship between Wall Street and Washington that confirmed Brandeis’s fears about the political power of “our financial oligarchy.” The Gramm-Leach-Bliley Act of 1999 delivered the coup de grâce to Glass-Steagall. Removing what was left of the wall between commercial banking and investment banking, it allowed both kinds of banks to consolidate with each other and with insurance companies, and to own subsidiaries that engaged in either commercial or investment banking. In a gesture that would have appalled—but not surprised—Brandeis, officials from Citigroup reviewed the legislation in advance, and Clinton’s former treasury secretary, Robert Rubin, brokered the deal leading to the passage of the law while he was in secret negotiations to become co-chairman of Citigroup.*

The repeal of Glass-Steagall, which freed commercial banks such as Citi-bank to compete as investment bankers, allowed the concentration of financial assets in a way that surpassed even the concentrations that galvanized Brandeis during the Progressive era: as a result of the repeal, the largest twenty financial institutions in the United States went from controlling 35 percent of America’s financial assets to 70 percent, and the six largest banks—Morgan Stanley, JPMorgan Chase, Citigroup, Bank of America, Goldman Sachs, and Wells Fargo—came to own assets equivalent to 60 percent of the gross national product, up from less than 20 percent in the 1990s.

The power of our modern financial oligarchy expanded during the last days of the Clinton administration, with the enactment of the benignly named Commodity Futures Modernization Act, which removed the ability of the federal government to regulate derivatives, or complicated bundles of subprime mortgages and other financial instruments whose value derives from their expected future price rather than their actual value, which may be only dimly understood. The result was an explosion of the complicated and highly risky financial instruments that Brandeis most feared—such as credit default swaps, which allowed the banks to insure their debt obligations against default and write off the tremendous associated risks that complicit bond rating agencies had allowed them to minimize. Fiercely competing with investment banks for customers after the repeal of Glass-Steagall, the commercial banks were rapaciously buying up credit default swaps to loosen their capital in search of higher yields. (As Brandeis predicted, they were more concerned about bonuses and short-term profits than the long-term risks to their shareholders and to the economy.) The deregulation of derivatives allowed companies like the insurance giant AIG to sell investment banks billions of dollars in credit swaps without having any assets to back them up. Moreover, investors did not need to understand the risks associated with the underlying asset to purchase a credit swap; through AIG, investors could take bets on whether mortgagers and other debtors would default on their loans, creating a trillion-dollar market in unregulated gambling.

Although the crash of 2008 occurred in an economy vastly more complex than the crashes of 1907 and 1929, it vindicated all of Brandeis’s fears. Like their predecessors a hundred years ago, the huge investment banks of today made their money by capturing brokers’ fees based on the volume of trades they placed, rather than on the underlying soundness of the investments. The brokers had no interest in whether the subprime mortgages they were bundling and reselling for profit were in fact sound, since their soundness had been (falsely) certified by greedy ratings companies. (Brandeis on the element of time: “How can the leading bankers, necessarily engrossed in the problems of their own vast private business, get time to know and to correlate the facts concerning so many other complex businesses?”) They maximized their profits by borrowing as much of “other people’s money” as possible (evading or diluting capital requirements) and leveraging themselves into recklessly risky positions.

The modern version of the legalized gambling that Brandeis abhorred was the ability of the mega-banks to use their domination of the market to engage in proprietary trading—that is, to place risky and volatile bets for their own accounts, rather than earning commissions by trading for their customers’ accounts. Proprietary trading desks, which often risk the most money for firms such as Goldman Sachs and are responsible for the biggest profits and losses, are the equivalent of internal hedge funds. When the bets went bad in 2008, the biggest investment banks were rescued by the then-unspoken guarantee that the government would step in if necessary to prevent a catastrophic failure of the system, as it had done in 1984 and 1998. That expectation did not save Lehman Brothers—or Barings Bank, which was brought down years ago by a trader who placed proprietary bets. But since then, the idea that certain banks are “too big to fail” has virtually become government policy. As a result, the mega-banks can take on even more risks than their competitors—including billions of dollars in side bets on their own failure—since everyone knows the government will clean up after them.

The idea of “too big to fail” is the perverse culmination of Brandeis’s dystopian view of high finance. His main concern was not, as his critics suggest, the economic inefficiency of large firms, but the oligarchic influence they wielded over the American financial and political system, which allowed them to shield themselves from accountability for their own greed and recklessness. In an irony that Brandeis would not have relished, the smaller banks that resisted the risky proprietary trading of the mega-banks were allowed to fail, while the biggest banks that caused the crisis by flooding the market with junk securities were rescued.

What about regulatory responses to the crash of 2008? Paul Krugman has argued that the reformers fall into two camps—those who are concerned about the size of banks and those who want more effective regulation. Since everyone wants more effective regulation, a better dichotomy might be between the Jeffersonian-Brandeisians, who want to break up the big banks and prevent them from engaging in risky behavior, and the Hamiltonian neo–New Dealers, who prefer top-down government regulation. The Brandeisians are led by Paul Volcker, the former chairman of the Federal Reserve, who argues, like Brandeis, that the mega-banks should be broken up into smaller units that are not too big to fail. Brandeis’s suggestion was to tax size: he argued that every business unit above a certain size should be forced to pay a tax large enough to be a burden for an inefficient mammoth but not for an efficient one. Although some economists today have supported a tax on size, the modern version of Brandeis’s proposal to break up big banks came from a Senate bill proposed by Senator Kaufman of Delaware and Senator Brown of Ohio that would have capped the size of the mega-banks. The bill would have limited the liabilities of any single bank to 2 percent of GDP, and would have limited the total amount of insured deposits any bank could hold to 10 percent. But the attempt to break up the banks was opposed by the Hamiltonians in the Obama administration, Lawrence Summers and Timothy Geithner, and it failed in the Senate by a vote of 61-33.

In addition to proposing to limit the size of banks, the Brandeisians today had another proposal to limit risky gambles by mega-banks. Dubbed by President Obama the “Volcker Rule,” it would have banned the banks from engaging in proprietary trading for their own accounts. When Senator Levin and Senator Merkley proposed a relatively strict version of the Volcker Rule that would have shut down proprietary trading by the mega-banks, Republicans prevented a vote.

The financial reform passed by the Senate, the most sweeping overhaul of the financial system since the Great Depression, unfortunately represents a triumph of the neo–New Dealers over the Brandeisians. It seeks to end the “too big to fail” phenomenon by creating a new “Financial Stability Regulatory Council” to identify “systemic risks,” in the hope of preventing companies from becoming too big to fail, as well as empowering the Federal Reserve to supervise the largest and most complex mega-banks to help them understand systemic risks. The bill also empowers the federal government, in extreme cases, to liquidate troubled companies by seizing them, firing their management, and funding their operations until they can be broken up and sold off. It would also regulate the trading of derivatives and empower the Securities and Exchange Commission to regulate hedge funds.

Brandeis would have supported the transparency requirements in the new financial regulations, which require complex derivatives to be traded through third parties instead of between customers and banks. But he would have objected that neither transparency nor allowing federal regulators to close down troubled banks addresses the central problem that he identified in Other People’s Money: once the banks start to trade instruments that are too complicated for buyers and sellers to investigate and to understand, banker management is doomed to fail according to “the fundamental law of human limitations.” And if bankers cannot understand the risks posed by complicated derivatives, federal regulators, who suffer from the same human limitations, are not likely to do much better.

Brandeis also understood the problem that we now call regulatory capture—namely, the likelihood that federal officials who are given broad discretion to regulate the financial industry will be successfully defanged by the lobbying power of our financial oligarchy. All of which is to say that the conflicts of interest and oligarchical behavior that Brandeis warned about will persist as long as the banks continue to engage in risky behavior to inflate their short-term stock prices at the expense of long-term productive investments. For these reasons, I have no doubt Brandeis would have insisted that without limiting the size and proprietary trades of the banks, the risky behavior will continue, leading to future crashes.

For Brandeis, the main objection to large corporate centers of private power was not primarily economic, it was moral. In his view, the curse of bigness was a threat not only to efficiency, but also to political liberty and democracy. In the wake of the crash of 2008, Brandeis’s insistence that businesses meet moral standards as well as economic ones seems more urgent than ever.

III.

Brandeis’s reputation could rest alone on his analysis of corporate bigness, and on its premonitory brilliance. And this he accomplished before he joined the Supreme Court. On the bench, further distinction followed. He became the most far-seeing progressive justice of the twentieth century, the one whose judicial philosophy is most relevant for the Court today as it confronts questions involving regulation in a time of economic crisis and the preservation of constitutional liberty in a time of technological change. The judicial philosophy of Justice Brandeis rested on three pillars: a commitment to judicial restraint, rooted in deference to legislative experimentation and states’ rights; a crusading opposition to the effects of large corporations on American democracy; and a determination to translate the values of the constitutional Framers into concepts and rulings that were required in an era of social and technological change, to interpret the document not just in light of its original understanding but also as a synthesis of the progressive history of the United States.

The populist crusade against big business gained steam in the 1890s, and by the turn of the century a coalition of industrial workers, urban social reformers, small businesses, and farmers began to lobby state legislatures to pass laws to curb the corporate excesses of an industrial age. In the first decade of the twentieth century, state legislatures responded by enacting antitrust laws, maximum-hour and minimum-wage laws, and workmen’s compensation laws. This amounted to a kind of social revolution, one of the greatest bursts of decency in American history. But the American judiciary in those momentous years cast itself as a pro-business conservative force, defending property rights and corporate interests against progressive regulation. As a result, “Progressivism,” as Learned Hand put it, “reflects a suspicion of courts.”

Brandeis was a product of the Progressive movement, and one of its shining lights. On the Supreme Court, he was part of the progressive tradition that advocated judicial restraint, although he never went so far as embracing the most radical progressive proposals to limit the courts, such as the popular recall of judicial decisions. Instead Brandeis insisted that judges should hesitate to strike down state and federal laws unless they clearly and uncontroversially violated explicit constitutional rights and limitations, and he insisted that decisions should be written as narrowly as possible to avoid broad constitutional rulings. “The most important thing we do is not doing,” Brandeis once remarked to Felix Frankfurter. In 1936, in Ashwander v. Tennessee Valley Authority, Brandeis articulated the doctrine of constitutional avoidance that Chief Justice John Roberts ostensibly embraced but has inconsistently applied—namely, that because of the limitations of human reason, judges were more likely to achieve consensus on narrow technical questions involving procedure and jurisdiction rather than on broad constitutional questions involving a clash of values, and therefore the Court should not “formulate a rule of constitutional law broader than is required by the precise facts to which it is to be applied.”

Brandeis was the leader of a tradition that no longer exists on the Supreme Court—a progressive championing of states’ rights and federalism. (He was the first to characterize the states as “laboratories of democracy,” a phrase that has become the touchstone of conservative defenders of federalism today.) The states fulfilled his Jeffersonian belief that small-scale democracy was most likely to satisfy human needs; and in his day the states were indeed more inclined to champion progressive values than the conservative courts. Brandeis generally voted to uphold federal laws as well as state laws; and although he was personally alarmed by the growing centralization of the federal government under Franklin D. Roosevelt, he voted to uphold most of the New Deal.

But he was willing to join some of the opinions striking down New Deal legislation, because in his view it threatened democratic accountability by transgressing clear constitutional limits on the delegation of executive power. The Roosevelt administration never adopted the kind of confiscatory taxation that Brandeis thought was necessary to limit corporate size. Instead, the New Deal included aggressive assertions of executive and congressional power that, in Brandeis’s view, transferred the curse of bigness from business to the federal government. “The doctrine of the separation of powers was adopted by the Convention of 1787 not to promote efficiency, but to preclude the exercise of arbitrary power,” he wrote in 1926 in his dissent in Myers v. United States, a case holding that Congress could not limit the president’s unitary authority to fire executive branch officials he appointed. And in a series of cases in 1935, Brandeis joined unanimous opinions striking down elements of the first New Deal that he felt raised the specter of autocracy by creating unchecked, centralized federal power.

Brandeis especially disliked the National Industrial Recovery Act (NIRA), which suspended antitrust laws and allowed all the firms in an industry to write legally enforceable codes of fair conduct. In 1935, Brandeis joined an 8-1 opinion striking down the act’s “hot oil” clause, which permitted the president to ban interstate shipments of oil that exceeded state production limits. In the view of Brandeis and his colleagues, Congress had delegated lawmaking power to the president without providing sufficient guidelines to constrain executive discretion. (The same argument would be raised decades later against President Bush’s and President Obama’s Troubled Asset Relief Program). And on May 27, 1935—known as Black Monday—the Court handed down three opinions questioning the extent of federal power to fight the Depression. Brandeis wrote or joined these opinions—in fact, all three were unanimous. Convinced that “our Court did much good for the country,” Brandeis asked a friend to deliver a message to Felix Frankfurter and the advisers he had brought into government. “You must see that Felix understands the situation and explains it to the president,” Brandeis said. “They must understand that these three decisions change everything. The president has been living in a fool’s paradise.”

It is striking to contrast the unanimous opinions Brandeis joined questioning some of the excesses of the New Deal with the ideologically divided decisions of the pro-business justices on the Roberts Court who are beginning to question certain aspects of the economic and regulatory reforms that followed the crash of 2008. Brandeis mistrusted big business and a big federal government; but the pro-business conservatives on the Roberts Court embrace bigness in both arenas. Justice Scalia, for example, has questioned the constitutionality of independent agencies that Brandeis helped to establish and voted to uphold, such as the FTC, and suggested that he would overturn the unanimous 1935 Humphrey’s Executor case, which Brandeis joined, because of his devotion to unchecked (or “unitary”) executive power. Scalia and the other conservative justices have also consistently ruled in favor of big business defendants in antitrust cases and have broadly construed federal regulations to “pre-empt” pro-consumer state regulations and jury verdicts to the contrary. The pro-states’ rights and pro-antitrust Brandeis would have reached the opposite conclusion.

Broadly speaking, the liberal and conservative justices on the Roberts Court harbor a suspicion of “regulation by litigation” that Brandeis, the people’s lawyer, did not share. There is no economic populist on the Roberts Court who expresses Brandeis’s suspicion of bigness in both corporations and government. When Brandeis voted against aspects of the New Deal, he did so not because he believed in an unregulated market, as modern conservatives and Tea Party activists do, but because he believed that corporations should be broken up by taxation so they were small enough to be effectively regulated by the states.

There is another crucial difference between Brandeis’s vision of judicial restraint and that of his contemporaries and successors. He fervently believed in the economic justice of the legislation he voted to uphold. This distinguished him from Holmes, for example, who was even more rigidly committed to judicial deference, because of his radical skepticism about the ability of judges or legislators to discern the truth, and who also had contempt for democracy and for the Progressive legislation that he voted to uphold. “I am so skeptical as to our knowledge about the goodness or badness of laws that I have no practical criticism except what the crowd wants,” Holmes wrote to Sir Frederick Pollock in 1910, having told his sister nearly fifty years earlier that he “loathe[d] the thick-fingered clowns we call the people.” Brandeis, by contrast, never condescended to the people or to democracy: he was idealistic about the possibility of citizens engaging in serious deliberation in communities, so as to pass laws that would meet human needs and promote social justice. For this reason, Brandeis never professed agnosticism about the economic regulations he criticized his colleagues for striking down. Quite the contrary. Many of his dissents include a passionate defense of why legislators properly viewed those laws as reasonable and necessary.

 

These two strains of Brandeis’s judicial philosophy—his judicial restraint and his crusading anti-corporate Progressivism—are on display in one of his most memorable (and quixotic) dissenting opinions, in Liggett v. Lee, a case striking down an anti-chain-store-law in Florida that aimed to protect small, independently owned businesses from competing with out-of-state chain stores by taxing the chain stores with a discriminatory license fee. Brandeis read his dissent from the bench on March 13, 1933, just days after the newly inaugurated President Roosevelt declared a bank holiday to quell the financial panic. Brandeis fervently defended what he saw as the social and historical realities that justified the Florida legislature’s protectionist action, and the economic reality of the Depression suffuses his entire dissent. “There is a widespread belief,” Brandeis wrote,

that the existing unemployment is the result, in large part, of the gross inequality in the distribution of wealth and income which giant corporations have fostered; that by the control which the few have exerted through giant corporations, individual initiative and effort are being paralyzed, creative power impaired and human happiness lessened; that the true prosperity of our past came not from big business, but through the courage, the energy and the resourcefulness of small men; that only by releasing from corporate control the faculties of the unknown many, only by reopening to them the opportunities for leadership, can confidence in our future be restored and the existing misery be overcome; and that only through participation by the many in the responsibilities and determinations of business, can Americans secure the moral and intellectual development which is essential to the maintenance of liberty.

This passage was characteristic of Brandeis’s greatest opinions, which begin with close technical analysis and end with passionate generalizations about the political and economic beliefs of the American people. In his judicial writing Brandeis could achieve a kind of constitutional poetry.

Brandeis was outraged that the Supreme Court had prevented states such as Florida from trying to protect local businesses from out-of-state rivals. In his view, the decision failed to defer to the superior fact-finding abilities of the legislature and offended principles of federalism and judicial restraint. But in addition to these abstract concerns, Brandeis made an affirmative case for the protectionist law as a principled response to the curse of bigness and as a way of translating time-honored American values into the twentieth century. Brandeis had long been looking for a case that allowed him to set out his views on the dangers of big corporations and Liggett was the one. It offered him an ideal chance to explain the ideas at the center of his economic thought, including his affinity for democratically accountable small businesses with clear ties to the community; his distrust of large business combinations, in which ownership and control were separated and managerial decisions were made far away from the actual economic activity they affected; and his broad view of government’s ability to use its tax and regulatory power to make corporations accountable to the general welfare.

Despite his professed devotion to facts, Brandeis was ultimately more interested in using his opinions to articulate and defend basic American ideals. But many observers joined the Liggett majority in viewing the Florida statute in the prosaic terms of economic protectionism. Brandeis’s former law clerk Henry Friendly was in Tallahassee at the time the anti-chain-store statute had been adopted, and observed the Florida legislature’s deliberations as the drugstore industry lobbied for the anti-chain-store law. “I was down watching the Florida legislature,” Friendly told Brandeis, “and I don’t think they had any of those social benefits in mind that you discussed. I think they were just influenced by the drug lobby.” According to Friendly, Brandeis did not smile or respond, he simply changed the subject. Another former clerk, David Riesman, told me years ago that Brandeis, although famous for his devotion to facts, never let them interfere with his single-minded devotion to his states’-rights ideals.

 

IV.

In addition to combining judicial restraint with passionate anti-corporate progressivism, Brandeis’s Liggett dissent exemplified a third aspect of his judicial philosophy: his commitment to interpreting the ideals of the Founders in light of the entire range of constitutional history. In this sense, Brandeis provides an inspiring model for citizens today who are searching for an alternative to the rigid originalism championed by some Roberts Court conservatives, and also for an alternative to the untethered “living constitutionalism” of some Warren Court liberals. Brandeis combines elements of originalism and living constitutionalism into an approach that might be called living originalism.

Brandeis believed that the values of the Founders were immutable, but had to be translated into a very different world in light of dramatic changes in society, technology, and economics. He believed in constitutional change—in a talk called “The Living Law,” he charged that the law had “not kept pace with the rapid development of our political, economic, and social ideals” and said “the challenge of legal justice [was] to conform to our contemporary conceptions of social justice.” But Brandeis insisted that efforts to render constitutional values in a contemporary vocabulary always had to be rooted in the text and in the broad unchanging ideals of the Framers. By interpreting the values of the Framers in light of progressive movements across the range of American history, Brandeis believed they could be preserved in a way that served the needs of citizens in the here and now—which is, after all, what the Constitution was written to do.

Consider Brandeis’s most memorable attempt to adapt constitutional values to changes in technology. As early as 1928, in Olmstead v. United States, the Supreme Court encountered the problem of the constitutionality of electronic searches. When the federal government began to tap phones in an effort to enforce Prohibition, a bootlegger named Olmstead protested that the wiretaps violated the Fourth Amendment, which protects the right of the people to be secure in their “persons, houses, papers, and effects.” In a literal-minded majority opinion, Chief Justice William Howard Taft disagreed. The Fourth Amendment, he said, was originally understood to forbid only searches or seizures accompanied by physical trespass. The agents had not trespassed on Olmstead’s property when they placed wiretaps on the phone lines in the streets near his house, Taft held, and conversations were not tangible “effects” that could be searched or seized.

Brandeis was acutely interested in the question of technological espionage. Urofsky reports that he asked Herbert Croly to investigate examples of employers hiring spies to get information about workers who were union activists, and he wanted Felix Frankfurter to assign a student to investigate the Founders’ views about secret political operatives. In his visionary dissenting opinion in Olmstead, Brandeis grappled with the challenge of applying the Founders’ views about privacy to modernity. As private life had begun to be conducted over the wires in the age of radio, he observed, telephone conversations contained even more intimate information than sealed letters, which the Supreme Court in the nineteenth century had held could not be opened without a warrant. To protect the same amount of privacy that the Framers of the Fourth and Fifth Amendments intended to protect, Brandeis concluded, it had become necessary to extend those amendments to prohibit warrantless searches and seizures of conversations over the wires, even if the invasions occurred without physical invasions. It took the Supreme Court—and Congress—decades to answer Brandeis’s challenge.

At the time of the Framing, Brandeis noted, the government had to break into homes to seize private papers, but changes in technology had now made it possible to invade privacy without trespassing on private property. (At this point, Urofky reports, Brandeis wanted to cite a new device called television, recently developed by General Electric, but a skeptical law clerk—Henry Friendly, again—persuaded him to remove the reference.) In a remarkably prescient passage, Brandeis looked forward to the age of cyberspace, predicting that technologies of surveillance were likely to progress far beyond wiretapping. “Ways may some day be developed,” he observed, “by which the Government, without removing papers from secret drawers, can reproduce them in court, and by which it will be enabled to expose to a jury the most intimate occurrences of the home.” Unless a way could be found for the Constitution to address the new technologies, less privacy and freedom would be protected in the twentieth century (and the twenty-first) than the Framers of the Constitution expected of the eighteenth century.

 

How would Brandeis approach the transformation of privacy in the modern age by new technologies such as cloud computing? Now that our “papers and effects” are stored not in desk drawers, but in “the cloud”—that is, on distributed servers, owned by Google or Yahoo, that can be accessed virtually with Web browsers—should the government be able to seize the data at will? The current Supreme Court has said yes, in many circumstances, because of two implausible doctrines that have prevented the Fourth Amendment from keeping pace with changes of technology. First, the Court has held that if you surrender data to a third party, even for a limited purpose, it generally loses all Fourth Amendment protections. This means that if you turn your private papers over to Google, Google can be compelled to turn them over to the government. Second, the Court has held that the only expectations of privacy that are entitled to constitutional protections are those that society reasonably expects. The circularity of this reasoning is obvious: as people expect greater invasions of privacy, their constitutional protections are correspondingly diminished.

Brandeis would never have tolerated these arid and unpragmatic abstractions, which have the effect of giving citizens less privacy in the age of cloud computing than they had during the Founding era. In applying the Constitution to the perplexities of our time, he might have looked to the states as laboratories of democracy: according to an ACLU study, eleven states have rejected the “third party” doctrine, which says that surrender of data for one purpose eliminates constitutional protection for all purposes, and nine more states have indicated that they might reject it in the future.Or Brandeis might hold, with some states, that government intrusions must be no greater than necessary, encouraging judges to balance the intrusiveness and effectiveness of the search against the seriousness of the crime. Or he might attempt to define how much privacy citizens in a free society should be entitled to expect, regardless of society’s expectations. Or he might look to European democracies, some of which adopt a proportionality principle that balances the justification for the search against its impact on the affected party. What’s clear is that Brandeis would have considered it a duty to actively engage in the project of constitutional translation in order to preserve the Framers’ values in a startlingly different technological world.

In the age of the Internet, then, Brandeis is the most relevant figure, the prophet not only of privacy but also of free speech. His concurring opinion in Whitney v. California in 1927 is the most far-seeing essay on the purposes and the boundaries of free speech in American history—more so than the free speech opinions of Holmes, which are quoted more often but are less substantively appealing. Brandeis’s opinion in Whitney completed the evolution that he and Holmes began in March 1919, when Holmes wrote opinions for the Court upholding the convictions under the Espionage Act of socialists who criticized World War I. In 1919, in Abrams v. United States, Holmes wrote a dissent, joined by Brandeis, that represents his best vision of the First Amendment. “The ultimate good desired is better reached by free trade in ideas,” Holmes declared. “The best test of truth is the power of the thought to get itself accepted in the competition of the market.”

Holmes’s libertarian defense of free speech as the currency of the marketplace of ideas was consistent with his nihilistic vision of American democracy, which he developed out of his experience in the Civil War. Holmes believed that majorities had to be given virtually unlimited power to crush minorities through law, or else their disagreements would break out into actual violence.
But although Brandeis joined several of Holmes’s dissents, he provided in Whitney a much more idealistic and positive vision for the protection of free expression by the courts. Brandeis stipulated that speech could be restricted only if it threatened harms that were both imminent and serious and if there was no time for deliberation to defuse the danger—conditions that the Court would embrace more than forty years later.

Brandeis’s faith in deliberation was based on his conviction that if people were given time and opportunity to engage in “public discussion”—which is “a political duty”—then “the power of reason” would prevail. In his concurrence, Brandeis argues that free speech is necessary both for “the discovery and spread of political truth” and for men to “develop their faculties.” But his justifications for free speech are not limited to self-rule and self-fulfillment. He goes on to argue that “the deliberative forces should prevail over the arbitrary,” and also “that the greatest menace to freedom is an inert people.” He is offering a defense of free speech rooted in the classical republicanism of the Greeks and Romans rather than in the liberalism of the nineteenth century.

Expanding upon the arguments of the scholar Philippa Strum, Urofsky notes that Brandeis’s peroration about the Framers’ views of free speech—“they believed liberty to be the secret of happiness and courage to be the secret of liberty”—comes almost directly from Pericles’s funeral oration. Strumm also noted that one of Brandeis’s favorite books was Alfred Zimmern’s The Greek Commonwealth, which he read in the winter of 1913. Zimmern, like Brandeis, viewed Periclean Athens as a model for modern democracies, and insisted that only active and serious political participation by citizens could safeguard democratic virtue. Rejecting Holmes’s cynical view that majority will had to be accepted even when it was brutally misguided, Brandeis worried, with Madison and Mill, that governing majorities could become occasionally tyrannical. But he also had faith that a virtuous and engaged citizenry—grounded in small communities—could, through deliberation, achieve a good in common that it could not know alone.

Although Brandeis’s doctrinal conclusions about the First Amendment were eventually embraced by the modern Supreme Court, his philosophical vision has met with strenuous resistance. The Court has repeatedly endorsed Holmes’s metaphor of free trade in ideas, while rejecting Brandeis’s competing notion that the core of the First Amendment is the positive liberty of citizens to engage in public deliberation rather than the negative liberty of citizens to be free from any governmental restrictions on speech. “The concept that government may restrict the speech of some elements of our society in order to enhance the relative voice of others is wholly foreign to the First Amendment,” the Court wrote with a Holmesian flourish in 1976.

Brandeis would certainly have deplored the Court’s recent decision in Citizens United v. FEC, in which it struck down restrictions on corporate campaign spending: as he wrote in his Liggett dissent (which was cited by Justice Stevens and the other dissenters in Citizens United), legislatures throughout the nineteenth and early twentieth centuries imposed a host of regulations to ensure that the corporate form did not threaten the autonomy and deliberative powers of citizens. Campaign finance regulations on corporations implicate three of Brandeis’s greatest concerns—the peril of corporate bigness, the importance of public deliberation, and the imperative of judicial restraint.

 

And what would Brandeis have made of the coming threats to free speech and privacy in the age of the Internet? He would have recognized, surely, that the lawyers at Google and Facebook have more influence over who can speak, and who can be heard, and who can escape his past, than the justices of the Supreme Court, and he would have been concerned about the ways in which concentrated corporate power may threaten public deliberation rather than encourage it. He would have appreciated that the most important recent development in free speech has been not the libertarian chest-beating of the Supreme Court, but the Federal Communications Commission’s endorsement of “net neutrality”—namely, the rule that Internet service providers must treat all content equally and cannot delay or block any applications. More generally, Brandeis would have encouraged the FCC and other regulatory bodies to explore the free speech implications of antitrust regulations as it considers proposed mergers such as the one between Comcast and NBC.

Above all, the Internet vindicates Brandeis’s warnings about the complexities and the dangers of deliberation by engaged citizens in bounded, small-scale communities. On the one hand, citizens are finding—on Facebook, in blogs, and in comments sections across the Web—some kind of digital fulfillment of the Periclean commonwealth that Brandeis viewed as a model for the “political duty” of “public discussion.” When freed from the need to submit their speech to censors and intermediaries—with very troubling exceptions in China, Iran, and other repressive states—citizens can deliberate, respond, and refine their views on matters of public interest in ways that approach Brandeis’s ideal. On the other hand, the same Web communities are full of the idle gossip that Brandeis lamented in his famous article on the right to privacy—and on a scale that makes Brandeis’s concerns about the invasions of social privacy by the Kodak camera and the instant press look quaint.

With nearly five hundred million users, Facebook and its forums are full not only of deliberation about public issues, but also of less elevating photos, chat, self-exposure, and speculations about the private lives of others that, in Brandeis’s view, crowd the public sphere and leave less space or attention for matters of public concern. Brandeis would have worried also about the polarization of speech on the Internet into “communities of interest” that often amount to electronic mobs, relentlessly insisting upon more and more extreme versions of their positions, and more and more conformity to their extremism. This is not remotely what we mean by public reason. It is, in fact, the death of public reason.

The Constitution generally restricts the government, not corporations and other private actors, and Brandeis would not have assumed that the solutions to his fears about the corruption of deliberation by cyber-demagoguery, or the destruction of privacy by Facebook, were necessarily constitutional solutions. Surely he would have exhorted Congress, as well as the FCC and the FTC, to protect free speech and privacy from corporate threats in cases where the First and Fourth Amendments could not plausibly reach. And if judges, Congress, and the regulatory agencies refused to act, he would have turned his attention to state legislators and a mobilized citizenry.

I imagine he would have been nervously optimistic about the possibility of achieving reasoned deliberation in bounded communities on the Web; and he would have insisted that individual citizens—not government or judges—bore the ultimate responsibility for using social networking technologies to “develop their faculties” of public deliberation, rather than to play video games, gossip, rant, or amuse themselves to death. Brandeis developed an interesting and rather strenuous conception of the importance of leisure as a condition of personal and social fulfillment. Individuals had to decide between idle amusements and meaningful self-improvement, between wasting their time as consumers or elevating themselves into engaged citizens. “The worker must, in other words, have leisure,” Brandeis wrote in a speech called “True Americanism.” “But leisure does not imply idleness. It means the ability to work not less but more, ability to work at something beside breadwinning.... Leisure, so defined, is an essential element of successful democracy.”

V.

Brandeis’s convictions, his Jeffersonian ideals about democratic participation and small-scale self-government, eventually came to focus on a distant place where he dared to believe that they could be achieved. That place was Palestine. Raised as an unobservant and non-practicing Jew, Brandeis experienced a remarkable personal and intellectual transformation in his fifties. He became the head of the Zionist movement in America.

How did he become a Zionist? Although he never denied his Judaism, Brandeis had identified only marginally with Jews since his childhood in St. Louis. This changed in 1910. “Throughout long years which represent my own life, I have been to a great extent separated from the Jews,” Brandeis declared in 1914 at an emergency meeting of the American Zionists at the Hotel Marseilles in New York, which he agreed to chair at the request of the young Zionist and cultural critic Horace Kallen (who was also one of the intellectual forces at this magazine). “I am very ignorant in things Jewish.”But he went on to say that “recent experiences, public and professional, have taught me this: I find Jews possessed of those very qualities which we of the twentieth century seek to develop in our struggle for justice and democracy: a deep moral feeling which makes them capable of noble acts; a deep sense of the brotherhood of man; and a high intelligence, the fruit of three thousand years of civilization.” All of these experiences convinced Brandeis that “the Jewish people should be preserved.”

What were the “public and professional experiences” that transformed Brandeis’s outlook from indifference about Judaism to crusading Zionism? He himself said he had come to Zionism through Americanism. Before 1910, he, like many upper-class American Jews of German and European heritage, was skeptical about Zionism because of his concerns about “dual loyalties” and his support for melting-pot assimilationism. In 1905, in a speech at the Century Club in New York, Brandeis echoed Theodore Roosevelt and Woodrow Wilson in warning about the dangers of separatism. “There is no place for what President Roosevelt has called hyphenated Americans,” Brandeis declared. “Habits of living or of thought which tend to keep alive difference of origin or to classify men according to their religious beliefs are inconsistent with the American ideal of brotherhood, and are disloyal.”

At the end of 1910, however, Brandeis was interviewed by Jacob de Haas, the editor of the Jewish Advocate in Boston, who asked he if was related to Lewis Dembitz. When Brandeis said yes—he had changed his middle name to Dembitz to honor his revered uncle—de Haas replied that “Dembitz was a noble Jew,” because he had been one of the first American supporters of Theodor Herzl’s plan to establish a Jewish homeland. That same year Brandeis served as a mediator in a factory strike by garment workers in New York City. Both the workers and the management involved in the strike were Russian Jews, and Brandeis later recalled how impressed he had been by the intellectualism and the idealism of the immigrant Jewish workers, an experience that gave him respect for their support for Zionism and their concerns about European anti-Semitism.

In addition to these two influences, Urofsky notes an intellectual one: Horace Kallen, the leading American theorist of cultural pluralism, who had met Brandeis while he was a Harvard undergraduate and in 1913 sent Brandeis a copy of an essay he had written on Zionism and Palestine. In his essay, called “Judaism, Hebraism, Zionism,” Kallen introduced an idea that he would develop later: namely, that preserving a distinct Jewish identity in Palestine was the best way to preserve a unique Hebraic culture that could enrich both America and the world.Kallen discussed these ideas with Brandeis in 1914, on their way to the conference at the Hotel Marseilles. As Kallen later recalled the meeting, “The important thing for him was that the proclaimed antagonism between Americanism and Zionism was a false claim—it didn’t have to be. . . . Because to begin with he believed that he could not be an American and a Zionist completely. Then he came to believe that he could, and that he would, and he did.”

Kallen’s mature reflections on Zionism were related to his groundbreaking ideas about cultural pluralism. Rejecting the assimilationist ideology of the melting pot, Kallen would write in Cultural Pluralism that members of immigrant groups could not, and should not, try to shed their unique cultures and values, since by retaining their individual hyphenated identities, they could better contribute to the diversity of the American whole. It was only by cultivating a variety of group identities that individuals could develop their own unique personalities.

The evolution of Brandeis’s thinking about Zionism was swift and dramatic. In 1912, he joined the Federation of American Zionists, which had a modest membership of just over twelve thousand.With the outbreak of World War I in Europe, European Zionism was paralyzed due to its isolation. (The World Zionist Organization was headquartered in Berlin.) As a response to this need, a group of American Zionists called for an emergency meeting to be held at the Hotel Marseilles on August 30, 1914. Urged to chair the meeting by de Haas and Kallen, Brandeis agreed to do so, and then proceeded to assume the leadership of what would soon prove to be an enthused and reinvigorated American Zionist movement.

Brandeis offered his most comprehensive statement on Zionism in “The Jewish Problem—How to Solve It,” a speech delivered in 1915 before the conference of the Eastern Council of Reformed Rabbis in New York. In the speech, he argued passionately that hyphenated group identity is important for the development not only of American ideals but also of individual self-fulfillment. “This right of development on the part of the group is essential to the full enjoyment of rights by the individual,” he declared. “For the individual is dependent for his development (and his happiness) in large part upon the development of the group of which he forms a part.” All this was distinctly in the spirit of his Whitney concurrence. “We recognize,” he continued, “that with each child the aim of education should be to develop his own individuality, not to make him an imitator, not to assimilate him to others. Shall we fail to recognize this truth when applied to whole peoples? And what people in the world has shown greater individuality than the Jews?” Of all the peoples in the world, said Brandeis, “the Greeks and the Jews” are “preeminent as contributors to our present civilization.”

Brandeis’s views about the Jewish return to Palestine as a fulfillment of the democratic ideals he admired in fifth- century Athens were shaped by his reading of Alfred Zimmern. As Philippa Strum has noted, the similarities between Brandeis’s and Zimmern’s vision of the possibility of democracy in Palestine and Greece are uncanny. Both the Zionists and the ancient Greeks shared views about the importance of decentralization, local self-government, and independence; efficient management as a cornerstone of democratic government; the need for justice and idealism in public affairs; material wealth as a means for social well-being and not as an end in itself; protecting human dignity in labor; and a belief that all problems have human solutions. Zimmern believed that geography was a central determinant of culture, and that Palestine’s geography, like that of Athens, made it ripe for a democratic society. And Zimmern had juxtaposed Jewish sources—from the Pentateuch, the prophets, and Jewish history—alongside the Greeks, and suggested that classical civilizations of both cultures shared many of the same values.Brandeis viewed Palestine as a society that could transcend the social and political problems that he saw in America, including the especially detestable infatuation with bigness. Brandeis ultimately traveled to Palestine with Zimmern in 1919, and found in the kibbutzim of the yishuv a contemporary fulfillment of his Jeffersonian vision.

In Zionism, Brandeis found his own best answer to “the Jewish Problem.” He wrote that “Zionism seeks to establish in Palestine, for such Jews as choose to go and remain there, and for their descendants, a legally secured home, where they may live together and lead a Jewish life, where they may expect ultimately to constitute a majority of the population, and may look forward to what we should call home rule.” And he envisioned mutual benefits for Palestine and for America, as Zionism warded off assimilationist tendencies among American Jews who decided to support the Jewish homeland but not settle there, preserving the individuality of the American Jewish community. By “securing for those Jews who wish to settle there the opportunity to do so, not only those Jews, but all other Jews will be benefited, and . . . the long perplexing Jewish Problem will, at last, find solution.”

Now convinced of the value of group differences for preserving American ideals, Brandeis reversed his previous bias against hyphenation:

Let no American imagine that Zionism is inconsistent with patriotism. Multiple loyalties are objectionable only if they are inconsistent. A man is a better citizen of the United States for being also a loyal citizen of his state, and of his city; for being loyal to his family, and to his profession or trade; for being loyal to his college or his lodge.Every Irish American who contributed towards advancing home rule was a better man and a better American for the sacrifice he made. Every American Jew who aids in advancing the Jewish settlement in Palestine, though he feels that neither he nor his descendants will ever live there, will likewise be a better man and a better American for doing so.

Far from suffering from a clash of identities, “loyalty to America demands rather that each American Jew become a Zionist,” he concluded memorably. He ended the speech with the prophetic Manichaeanism that led Franklin Roosevelt to call him “Isaiah”: “Organize, organize, organize, until every Jew in America must stand up and be counted, counted with us, or prove himself, wittingly or unwittingly, of the few who are against their own people.”

What is the pertinence to our own vexations of Brandeis’s vision of Zionism and compound identity? In his idealization of small-scale democracy in Palestine as the culmination of the Jeffersonian shire and the Athenian polis, Brandeis was of course something of an idealist. The Jewish state did not develop in a communalist direction; it thrived economically as a bastion of democratic capitalism. It must also be noted that even though Brandeis supported “a legally secured home” for the Jews in Palestine, his Zionism was not so much about politics as about identity. His Zionism offers little guidance about wars and conflicts in the Middle East. Moreover, his identification of Zionism with Americanism was not, like the identification of Deutschtum with Judentum—of Germanness with Jewishness—by many German Jews of the time, an assertion of exclusiveness. Brandeis’s Zionism was in fact a doctrine of inclusiveness, and welcoming of similar expressions of group loyalty by other groups: it was, in this sense, a distinctly American sort of Zionism. And those German Jews who conflated their Germanness with their Judaism were often anti-Zionist. They aspired to a universality that worried about difference, whereas Brandeis chose to celebrate difference. Just days after Hitler took office, Brandeis declared that “the Jews must leave Germany . . . and they will,” because no self-respecting Jew could remain in the Third Reich. Alas, too many of them stayed where they were. Deutschtum turned out to be not at all like Judentum. Brandeis died in 1940, and so he never learned the worst.

American Jews today, of course, often disagree about the success of the Israeli government in achieving the ideals that Brandeis attributed to both Zionism and Americanism: namely, “the development of the individual for his own and the common good; the development of the individual through liberty, and the attainment of the common good through democracy and social justice.” But whatever Israel’s successes and failures, Brandeis’s argument for the integrity of the Zionist commitment remains powerful. The claim of Israel upon the support of American Jewry is based not only upon their Jewish identity but also upon their American identity. This was not “dual loyalty,” in Brandeis’s view; it was based upon a single philosophy. “My approach to Zionism was through Americanism,” he said. “In time, practical experience and observation convinced me that Jews were by reason of their traditions and their character peculiarly fitted for the attainment of American ideals. Gradually it became clear to me that to be good Americans, we must be better Jews, and to be better Jews, we must become Zionists.”This may be a little too tidy; but nothing in it contradicts the great American dispensation of pluralism, or the belief in the blessings of diversity that goes back even further to the Founding era. In Brandeis’s construction of Zionism, we are restored to one of the fundamental principles of modernity: the cultivation of the individual and the group, and the confidence that this cultivation is a universal good.

Brandeis was an individualist and a communalist. His vision of cultural pluralism is more urgent than ever in a globalized age. It provides a balanced alternative to the separatist tendencies of multiculturalism, which exalts group identity without insisting on universal values, and to the homogenizing assimilationist pressures of the Facebook culture, which, by destroying the boundaries between our public and private selves, is making it harder to maintain genuinely individual identities.

Brandeis reminds us that globalized Facebook culture is just as destructive of individuality as huge corporate culture, and that true individuality may be cultivated by active engagement in smaller groups, defined by hyphenated identities, bounded by genuine shared values. Or as Kallen put it, “It is the variety and range of his participation which does in fact distinguish a civilized man from an uncivilized, a man of faith and reason from an unreasoning fanatic, a democrat from a totalitarian, a man of culture from a barbarian. Such a man obviously orchestrates a growing pluralism of associations into the wholeness of his individuality.” After Brandeis’s death, Kallen described the interaction between Jews and non-Jews as a source of mutual enrichment, noting that “the social orchestration which this intercultural exchange consummates actualizes the American idea and gives the culture of the American people the qualities that Whitman and Emerson and William James and Louis Brandeis celebrated.”

 

All this, from a lawyer and a judge! But Louis Brandeis was more than a Supreme Court justice; he was a constitutional philosopher who belongs in the far-seeing company of Marshall, Hamilton, and Jefferson, and a social philosopher who was one of the inventors of American modernity. It is baffling, therefore, that he has so few acolytes among progressives and libertarians today. On the progressive left, the critics of corporate bigness are not equally suspicious of bigness in government, and rush to embrace centralized regulations—of health care and the economy—that Brandeis would have mistrusted. On the libertarian right, the Tea Party critics of a centralized federal government lack a similar mistrust of centralized corporate power, and in their deregulatory zeal are indifferent to the ways that unchecked oligarchies in the private sector can also threaten liberty. On the Supreme Court, liberal defenders of judicial deference to legislatures sometimes lack Brandeis’s passionate opposition to bigness in business and government; and conservative defenders of states’ rights and the separation of powers are sometimes indifferent to the individual liberties Brandeis thought both doctrines existed to protect. The ideological extremists who distort political discourse today grievously betray Brandeis’s sense of balance and proportion, his accurate awareness of human limitations, and his faith in the possibility of transcending them through passionate engagement on a human scale. But as the richness of traditional cultures increasingly comes under attack by technology, and as the dark side of particularism increasingly needs to be disinfected by the sunlight of universal reason, Brandeis must again be heard. And as the centralizing tendencies of democracies, corporations, and technologies around the world continue to threaten human individuality, Brandeis’s warnings about the dangers of size and the duties of public deliberation may help us to preserve the values of the American Framers and make them truly our own. This will require work. As Brandeis put it, “If we would guide by the light of reason, we must let our minds be bold.”

Jeffrey Rosen is the legal affairs editor for The New Republic.

*The piece originally stated that Robert Rubin was treasury secretary, but in secret negotiations to head Citigroup, when he brokered the deal to pass the Gramm-Leach-Bliley Act of 1999. Rubin was the former treasury secretary at the time. He was in negotiations to become co-chairman of Citigroup. We regret the errors.

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